A Guide to Section 17 and Key Business Areas
Thailand offers a wealth of business opportunities for foreigners, but like many countries, it has regulations in place to protect its local industries and workforce. One key regulation is Section 17 of the Foreign Business Act, B.E. 2542 (1999), which outlines the types of businesses that require a license for foreign operation and those in which Thai nationals are not yet ready to compete with foreign companies. This article provides an overview of obtaining a Foreign Business License under Section 17, along with insights into the types of businesses covered by this section and the steps for application.
What Is a Foreign Business License Under Section 17?
Section 17 of the Foreign Business Act allows foreigners to apply for a license to operate businesses that are restricted under Thai law. These restrictions are aimed at safeguarding certain industries and sectors for Thai nationals. However, with the proper approval, foreign companies can still enter and operate within these restricted sectors. This license is issued by the Department of Business Development (DBD) under the Ministry of Commerce, and obtaining it involves meeting several requirements to ensure the business aligns with Thailand’s economic and developmental goals.
Businesses Restricted Under Section 17
The government has outlined three main categories of businesses where Thai nationals are considered not ready to compete with foreigners. If you’re a foreigner seeking to establish a business in these industries, it is essential to obtain a Foreign Business License. Here are three key business areas that fall under this category.
1. Rice Milling and Production of Flour from Rice and Economic Plants
Thailand’s rice industry is a vital part of its economy, contributing significantly to its GDP and employment. The government has put in place protective measures to ensure that the milling and flour production sectors remain under Thai control. Rice milling involves processing harvested rice into a marketable product, and foreigners must acquire a business license if they wish to invest or establish operations in this sector. This is due to the industry’s significance for both local employment and national food security.
2. Fishery Hatching and Raising Aquatic Animals
Thailand’s fisheries are another vital industry, particularly in terms of exports. However, fishery operations related to the hatching and raising of aquatic animals are protected to ensure the industry remains predominantly Thai. Foreign businesses interested in engaging in fish farming or hatchery-related activities must secure a license under Section 17 to operate legally. This helps preserve traditional practices and ensures that the benefits of the sector primarily go to Thai citizens.
3. Forestry from Grown Forests
Forestry operations, especially those related to grown forests, are strictly controlled. The aim is to protect Thailand’s natural resources and ensure sustainable forestry practices. Foreign businesses that seek to invest in or manage grown forest areas are required to obtain a license under Section 17. This requirement ensures that environmental and local concerns are addressed and that the forestry industry remains under national regulation to prevent exploitation.
Other Restricted Business Areas
Production of plywood, veneer wood, chipboards, or hardboards
Production of lime
Provision of legal, accounting, architectural, and engineering services
Construction projects (with certain exceptions)
Wholesale and retail businesses with specific capital requirements
Hotel businesses, except for hotel management services
Sale of food and beverages
Cultivation or development of plant varieties
These sectors are considered critical for maintaining Thailand’s economic stability and ensuring that local enterprises can compete fairly with foreign investors.
Applying for a Foreign Business License Under Section 17
The process for obtaining a Foreign Business License under Section 17 involves submitting a detailed application to the Department of Business Development (DBD). Below are the main steps involved.
Prepare Documentation The application must include essential documents, such as copies of passports, residence certificates, and business operation plans. If the applicant is a juristic person not registered in Thailand, they must submit certificates of the business's status, board of directors, and a notarized letter of appointment for a representative in Thailand.
Submit an Application The license application must be filled out in print, signed by the applicant, and submitted to the Department of Business Development in Bangkok or a provincial office. If the application is submitted by a representative, the representative must have a notarized power of attorney.
Provide Additional Evidence The application form must include a declaration of the business’s operation plan, including financial investments, workforce size, and any plans for technology transfers or research and development efforts. The government may request additional documents to assess the business’s economic benefit to Thailand.
Await Approval The Ministry of Commerce will review the application to ensure compliance with Section 17 regulations. If approved, the license will be issued, allowing the foreign business to operate in the restricted sector.
Importance of Compliance
Operating without a Foreign Business License in a restricted sector can lead to severe legal penalties, including hefty fines and potential imprisonment. Foreign businesses must ensure they fully understand the requirements of the Foreign Business Act and that they comply with all regulations before setting up operations in Thailand. Consulting with professionals who specialize in foreign business law in Thailand is advisable to ensure a smooth process.
Thailand’s Foreign Business License under Section 17 opens up the door for foreign companies to operate in industries traditionally restricted to Thai nationals. Understanding the key sectors that require this license and the process involved in obtaining one is crucial for any foreign business looking to expand into Thailand. By navigating these regulations successfully, foreign investors can tap into the immense potential that Thailand’s thriving economy offers while supporting the country’s growth and development goals.
For more information on how to apply for a Foreign Business License in Thailand, feel free to contact VisaVizThailand.com, where we provide professional guidance and assistance in securing business licenses and visas for foreign nationals.
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